<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 76-0011617
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
20555 S.H. 249
Houston, Texas 77070
(Address of Principal Executive Offices) (Zip Code)
------------------
Tandem Computers Incorporated 401(k) Investment Plan
(Full Title of the Plan)
------------------
J. David Cabello
Senior Vice President, General Counsel & Secretary
Compaq Computer Corporation
20555 S.H. 249
Houston, Texas 77070
(Name and Address of Agent for Service)
------------------
(281) 370-0670
(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Title of Proposed Proposed
Securities Amount Maximum Maximum
To be to be Offering Price Aggregate Amount of
Registered (1) Registered Per Share Offering Price Registration Fee
- ---------------------- -------------------- --------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock of
Compaq Computer 370,000 shares $53.6875 $19,864,375 $5.860
Corporation
============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 based upon the average of the high and low prices of the
Common Stock reported in the New York Stock Exchange consolidated reporting
system on December 26, 1997.
<PAGE> 2
Part II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
The following documents have been previously filed with the SEC and are
incorporated by reference into this Registration Statement:
1. Compaq's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. Compaq's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
3. Compaq's Current Reports on Form 8-K as filed on October 16, 1997
and November 21, 1997;
4. The description of the Compaq's common stock contained in
Compaq's Registration Statement on Form 8-A; and
5. The Plan's annual report on Form 11-K as filed on December 31, 1997.
Compaq is also incorporating by reference additional documents that we
may file with the SEC between the date of the Prospectus to which this
Registration Statement relates and the date of the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold.
Copies of the documents incorporated by reference above may be obtained
from Compaq without charge, except the exhibits (unless we have specifically
incorporated by reference an exhibit in this Prospectus), by writing to:
Compaq Computer Corporation
20555 SH 249
Houston, Texas 77070
Telephone: (800) 433-2391
Attention: Investor Relations
Item 5. Interests of Named Experts and Counsel.
The legality of the common stock offered by this Prospectus has been passed
upon for Compaq by Linda S. Auwers, Vice President and Associate General Counsel
of Compaq. Ms. Auwers has options to purchase Compaq common stock and owns
shares of Compaq common stock as a participant in an employee benefit plan.
<PAGE> 3
Item 6. Indemnification of Directors and Officers.
Exculpation. Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL") permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision may not eliminate
or limit the liability of a director for any breach of the director's duty of
loyalty to the corporation or its stockholders, for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, for the payment of unlawful dividends, or for any transaction from which
the director derived an improper personal benefit.
Compaq's Restated Certificate of Incorporation limits the personal
liability of a director to Compaq and its stockholders for monetary damages for
a breach of fiduciary duty as a director to the fullest extent permitted by the
DGCL.
Indemnification. Delaware law permits a corporation to indemnify its
officers and directors under any circumstances.
Compaq's Bylaws provide for indemnification of directors and officers
of Compaq against liability to the fullest extent permitted by applicable law.
Insurance. Compaq has in effect directors' and officers' liability
insurance and fiduciary liability insurance.
Item. 8 Exhibits
Exhibit No.
- -----------
4.1 Tandem Computers Incorporated 401(k) Investment Plan.
5.1 Opinion of Linda S. Auwers, Vice President and
Associate General Counsel of the Company, as to the legality
of the securities being registered.
23.1 Consent of Linda S. Auwers, Vice President and
Associate General Counsel of the Company, is included in the
opinion filed as Exhibit 5.1 to this Registration Statement.
23.2 Consent of Ernst & Young LLP, Independent
Auditors.
23.3 Consent of Price Waterhouse LLP, Independent Accountants.
24.1 Powers of Attorney are included on the signature page of this
Registration Statement.
<PAGE> 4
Item 9. Undertakings.
Compaq hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 5
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, and the State of Texas, on this 31st day of
December, 1997.
COMPAQ COMPUTER CORPORATION
By: /s/ J. David Cabello
----------------------------------------
J. David Cabello, Senior Vice President
and General Counsel
<PAGE> 6
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Compaq Computer
Corporation, do hereby constitute and appoint Eckhard Pfeiffer, Earl L. Mason
and J. David Cabello, or any one of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers, and to execute any and all instruments for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either one of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations, and requirements of the Securities and Exchange Commission,
in connection with the Company's registration statements on Form S-8 regarding
the Compaq Computer Corporation Deferred Compensation and Supplemental Savings
Plan, including specifically, but without limitation, power and authority to
sign for us or any of us, in our names in the capacities indicated below, such
registration statement on Form S-8 and any and all amendments thereto; and we do
each hereby ratify and confirm all that the said attorneys and agents, or either
of them, shall do or cause to be done by virtue hereof. The following persons
executed this power of attorney in the capacities and on the dates indicated
below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Eckhard Pfeiffer President, Chief Executive Officer December 31, 1997
- --------------------------- and Director (principal executive
(Eckhard Pfeiffer) officer)
/s/ Earl L. Mason Senior Vice President and December 31, 1997
- --------------------------- Chief Financial Officer (principal
(Earl L. Mason) financial and accounting officer)
/s/ Benjamin M. Rosen Chairman of the Board of Directors December 31, 1997
- ---------------------------
(Benjamin M. Rosen)
/s/ Lawrence T. Babbio Director December 31, 1997
- ---------------------------
(Lawrence T. Babbio)
/s/ Robert Ted Enloe, III Director December 31, 1997
- ---------------------------
(Robert Ted Enloe, III)
/s/ George H. Heilmeier Director December 31, 1997
- ---------------------------
(George H. Heilmeier)
/s/ George E.R. Kinnear II Director December 31, 1997
- ---------------------------
(George E.R. Kinnear II)
/s/ Peter N. Larson Director December 31, 1997
- ---------------------------
(Peter N. Larson)
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Director December 31, 1997
- ---------------------------
(Kenneth L. Lay)
/s/ Thomas J. Perkins Director December 31, 1997
- ---------------------------
(Thomas J. Perkins)
Director December 31, 1997
- ---------------------------
(Kenneth Roman)
/s/ Lucille S. Salhany Director December 31, 1997
- ---------------------------
(Lucille S. Salhany)
</TABLE>
<PAGE> 8
EXHIBIT INDEX
Exhibit
- -------
4.1 Tandem Computers Incorporated 401(k) Investment Plan.
5.1 Opinion of Linda S. Auwers, Vice President and
Associate General Counsel of the Company, as to the legality
of the securities being registered.
23.1 Consent of Linda S. Auwers, Vice President and
Associate General Counsel of the Company, is included in the
opinion filed as Exhibit 5.1 to this Registration Statement.
23.2 Consent of Ernst & Young LLP, Independent
Auditors.
23.3 Consent of Price Waterhouse LLP, Independent Accountants.
24.1 Powers of Attorney are included on the signature page of this
Registration Statement.
<PAGE> 1
EXHIBIT 4.1
TANDEM COMPUTERS INCORPORATED
401(k) INVESTMENT PLAN
Restated Effective as of January 1, 1993
<PAGE> 2
TANDEM COMPUTERS INCORPORATED
401(k) INVESTMENT PLAN
(As Amended and Restated
as of January 1, 1993)
PREAMBLE
The Tandem Computers Incorporated 401(k) Investment Plan was
established effective July 1, 1984 to provide Members with an
opportunity to participate in a qualified cash or deferred arrangement
under section 401(k) of the Internal Revenue Code. The Plan has been
amended from time to time since its adoption. It is intended that the
Plan be a profit sharing plan qualified under section 401(a) of the
Code and is intended to include a qualified cash or deferred
arrangement under section 401(k) of the Code. This amendment and
restatement of the Plan incorporates all amendments.
2
<PAGE> 3
ARTICLE I DEFINITIONS.
1.1 Accounts: The Company Account, the Deferred Account and the
Rollover Account, if any, to which contributions and earnings on
contributions are credited.
1.2 Actual Deferral Percentage: With respect to a specified group
of Employees, the average of the ratios, calculated separately for each
Employee in that group, of (a) the amount of Deferred Contributions
made pursuant to Section 3.1, plus the amount of Company Matching
Contributions made pursuant to Section 3.2, plus the amount of Company
Profit Sharing Contributions made pursuant to Section 3.3, for a Plan
Year to (b) the Employee's Compensation for that Plan Year.
1.3 Affiliated Company: A corporation, trade or business which is,
together with any Company, a member of a controlled group of
corporations or an affiliated service group or under common control
(within the meaning of Section 414(b), (c) or (m) of the Code), but
only for the period during which such other entity is so affiliated
with any Company and any other entity required to be aggregated with
any Company pursuant to regulations under Section 414(o) of the Code.
1.4 Beneficiary: Any person, persons or entity, described in
Section 8.4, who shall receive benefits in the event of the Member's
death.
1.5 Code: The Internal Revenue Code of 1986, as amended.
1.6 Company: Tandem Computers Incorporated, with respect to its
Employees, or any other Affiliated Company participating in the Plan,
as provided in section 13.3, with respect to its Employees.
3
<PAGE> 4
1.7 Company Account: The Account into which the Company contributions
made on a Member's behalf, and earnings on those contributions, are
credited.
1.8 Company Matching Contributions: The contributions made on a
Member's behalf by the Company pursuant to
Section 3.2.
1.9 Company Profit Sharing contributions: The Contributions made on a
Member's behalf by the Company pursuant to Section 3.3.
1.10 Compensation:
(a) The base salary, bonuses, overtime, shift differentials and
commissions paid to an Employee for services rendered to the Company, but
excluding any special payments. Compensation shall include only that
Compensation which is actually paid to an Employee during the Plan Year.
Special payments include but are not limited to moving allowances, foreign
pay allowances, living incentive pay and cost of living adjustments and
other payments, as defined from time to time by the Plan Administrator.
Compensation shall include any amount which is contributed by the Company
pursuant to a salary reduction agreement and which is not includable in the
gross income of the Employee under sections 125, 402(a)(8), 402(n) or
403(b) of the Code.
(b) The annual Compensation of each Employee taken into account
for determining all benefits provided under the Plan for any Plan Year
shall not exceed $200,000 (increased as provided by Treasury Regulations);
1993 Compensation limit: $235,840.
(i) if Compensation is to be determined on a period of time
that contains fewer than 12 calendar months, the annual Compensation limit
is an amount equal to
4
<PAGE> 5
the annual compensation limit for the calendar year in which the
compensation period begins, multiplied by the ratio obtained by dividing
the number of full months in the period by 12.
(ii) in determining the Compensation of a Member for
purposes of the foregoing $200,000 limitation, the rules of Section 414 (q)
(6) of the Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Member and any lineal
descendants of the Member who have not attained age 19 before the close of
the Plan Year.
(iii) if, as a result of the application of such rules the
adjusted $200,000 limitation is exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such
individual's compensation as determined under this section prior to the
application of this limitation.
(iv) if Compensation for any prior Plan Year is taken into
account in determining a Member's allocations or benefits for the current
Plan Year, the Compensation for such prior Plan Year is subject to the
applicable annual compensation limit in effect for that prior Plan Year.
(c) For purposes of applying the limitations of this Section,
Compensation for a Plan Year is the Compensation actually paid or made
available during such Plan Year. Notwithstanding the preceding sentence,
Compensation for a participant in a defined contribution plan who is
permanently and totally disabled (as defined in Section 22 (e)(3) of the
Code) is the compensation such Member would have received for the Plan
Year if the Member had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; such
5
<PAGE> 6
imputed Compensation for the disabled Member may be taken into account only
if the Member is not a Highly Compensated Employee and contributions made
on behalf of such Member are nonforfeitable when made. 1.11 Deferred
Account: The Account into which the Deferred Contributions are made on a
Member's behalf and earnings and losses on those Contributions as recorded.
1.11 Deferred Account: The Account into which the Deferred
Contributions are made on a Member's behalf and earnings and losses on
those Contributions as recorded.
1.12 Deferred Contributions: All amounts contributed pursuant to
Section
3.1 of the Plan.
1.13 Disability: Disability shall be determined by Tandem based on
medical evidence. The determination by Tandem as to whether a Member is
disabled shall be final, binding and conclusive. A Member shall be
considered to be disabled if his or her condition meets either of the
following definitions:
(a) The mental or physical inability of a Member to engage in the
regularly assigned duties of his or her employment with the Company which
inability is expected to be of long-continued and indefinite duration; or
(b) Disability determined under the long-term disability plan
maintained by the Company.
1.14 Direct Rollover: An Eligible Rollover Distribution paid directly
to an Eligible Retirement Plan for the benefit of a Distributee.
1.15 Distributee: An employee, surviving spouse of a Deceased
employee, or a spouse entitled to payment under a Qualified Domestic
Relations order.
1.16 Effective Date: The Plan became effective on July 1, 1984. The
Effective Date of this restatement shall be January 1, 1993; provided,
however, that any provision of this Plan required as a result of the Tax
Reform Act of
6
<PAGE> 7
1986 or any subsequent legislation shall be effective as of the earliest
date required by such legislation.
1.17 Eligible Retirement Plan:
(a) with respect to any Distributee, an individual retirement
account described in section 408(a) of the Code;
(b) with respect to a Distributee who is an Employee or a spouse
or former spouse of an Employee who is an Alternate Payee under a Qualified
Domestic Relations Order as defined in Section 12.1 below, an Eligible
Retirement Plan shall also mean an individual retirement annuity (other
than an endowment contract) described in Section 408(b) of the Code, a
qualified trust described in Section 401(a) of the Code or an annuity plan
described in Section 403(a) of the Code.
1.18 Eligible Rollover Distribution: All or any portion of the balance
to the credit of an Employee, except as provided in Treasury regulations
section 1.402(c)-2T.
1.19 Employee:
(a) Any person employed by the Company other than as an
independent contractor. The term Employee shall include any person (other
than an Employee of the Company) who, pursuant to an agreement between the
Company and any other person ("Leasing Organization"), has performed
services for the Company (or for the Company and related persons determined
in accordance with section 414(n)(6) of the Code) on a substantially
full-time basis for a period of at least one year, and such services are of
a type historically performed by employees in the business field of the
Company ("Leased Employee"). A Leased Employee shall not be considered an
Employee of the Company if both of the following conditions are met:
7
<PAGE> 8
(i) such Leased Employee is covered by a money purchase
pension plan providing:
(A) a non-integrated employer contribution rate of
at least 10% of compensation, as defined in Section 415(c)(3) of the Code,
but including amounts contributed pursuant to a salary reduction agreement
which are excludable from the Leased Employee's gross income under section
125, section 402(a)(8), Section 402(h) or section 403(b) of the Code;
(B) immediate participation; and
(C) full and immediate vesting.
(ii) Leased Employees do not constitute more than 20% of the
Company's non-highly-compensated work force. Contributions or benefits
provided a Leased Employee by the Leasing Organization which are
attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer.
(b) For purposes of this Plan, the term "Employee" Shall not
include:
(i) employees who are nonresident aliens (within the meaning
of section 77 01 (b) (1) (B) of the Code and who receive no earned income
within the meaning of Section 911(d)(2) of the Code from the Company which
constitutes income from sources within the United States (Within the
meaning of section 861(a)(3) of the Code).
(ii) employees included in a unit of employees covered by a
collective bargaining agreement between the Company and employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the employees who are covered
pursuant to that agreement are professionals as
8
<PAGE> 9
defined in Treasury regulations section 1.410(b)-9. For this purpose, the
term employee representatives" does not include any organization more than
half of whose members are employees who are owners, officers or executives
of the Company.
1.20 Enrollment Date: The first day of the first full payroll period
subsequent to an Employee's date of employment or reemployment.
1.21 ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
1.22 Excess Contributions: For any Plan Year, the total amount, (if
any) of Deferred Contributions, which are "excess contributions", within
the meaning of section 401(k) (8) (B) of the Code, made on behalf of Highly
Compensated Employees which exceeds the amount of such Deferred
Contributions that could be made for such Plan Year without violating the
requirements of Section 3.7(a).
1.23 Excess Deferrals: For any Plan Year, any amount allocated by the
Member to the Plan as an excess deferral, within the meaning of section
402(g)(2)(A) of the Code, for that Plan Year. 1.24 Fiduciary: A person who
is a fiduciary as defined in section 3(21) of ERISA.
1.25 Fund or Investment Fund: The separate funds to which Members
direct investment of contributions made on their behalf in accordance with
Article 4.
1.26 Highly Compensated Employee: Highly Compensated Active Employees
and Highly Compensated Former Employees, as defined below.
(a) "Highly Compensated Active Employee" includes any Employee
who performs service for the Company during the determination year and who,
during the look-back year:
9
<PAGE> 10
(i) received compensation from the company in excess of
$75,000 (as adjusted pursuant to Section 415(d) of the Code;
(ii) received compensation from the Company in excess of
$50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a
member of the top-paid group for such year; or
(iii) was an officer of the Company and received
compensation during such year that is greater than 50 percent of the dollar
limitation in effect under Section 415 (b) (1) (A) of the Code. The term
"Highly Compensated Active Employee" also includes Employees who are
described in the preceding sentence if the term "determination year,, is
substituted for the term "look-back year" and if the Employee is one of the
100 Employees who received the most compensation from the Company during
the determination year. Employees who are 5 percent owners at any time
during the look-back year or determination year are included as Highly
Compensated Active Employees.
(b) If no officer has satisfied the compensation requirement of
Section 1.26(a) (ii) above during either a determination year or look-back
year, the highest paid officer for such year shall be treated as a Highly
Compensated Employee.
(c) A "Highly Compensated Former Employee" includes any Employee
who separated from service (or was deemed to have separated) prior to the
determination year, performed no service for the Company during the
determination year, and was a Highly Compensated Active Employee for either
the separation year or any
10
<PAGE> 11
determination year ending on or after the Employee's 55th birthday.
(d) If an Employee is, during a determination year or look-back
year, a family member of either a 5 percent owner who is an active or
former Employee or a Highly Compensated Employee who is one of the 10 most
highly compensated Employees ranked on the basis of compensation paid by
the Company during such year, then the family member and the 5 percent
owner or top-ten highly compensated Employee shall be aggregated. In such
case, the family member and 5 percent owner or top-ten highly compensated
Employee shall be treated as a single Employee receiving compensation and
Plan contributions or benefits equal to the sum of such compensation and
contributions or benefits of the family member and 5 percent owner or
top-ten highly compensated Employee. For purposes of this section, family
member includes the spouse, lineal ascendants or descendants, or a spouse
of a lineal ascendant or descendant.
(e) The determination of who is a Highly Compensated Employee
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the compensation that is considered, will be made in
accordance with section 414(q) of the Code and the regulations thereunder.
(f) For the purpose of defining a Highly Compensated Employee,
the determination year shall be the Plan Year. The lookback year shall be
the twelve-month period immediately preceding the determination year.
11
<PAGE> 12
1.27 Member: Any person included in the membership of the Plan as
provided in Article 2.
1.28 Normal Retirement Date: The date a Member attains age 59-1/2.
1.29 Plan: The Tandem Computer Incorporated 401(k) Investment Plan as
set forth in this document as amended.
1.30 Plan Year: The 12-month period beginning on January 1 and ending
on December 31.
1.31 Profits: Both retained earnings and current net income of the
Company before deduction of federal, state and local income taxes and
before any contributions made by the Company to this or any other employee
benefit plan maintained by the Company, as determined by its independent
public accountants in accordance with generally accepted principles
consistently applied.
1.32 Rollover Account: The Account established to record a Member's
rollover contributions under Section 3.4 of the Plan and gains and losses
thereon.
1.33 Section 401(k) Ceiling: The dollar limit established in section
402(g)(1) of the Code, or any successor provisions. The Section 401(k)
Ceiling is $8,994 for 1993.
1.34 Section 415-Compensation: Wages, salaries, and fees for
professional services and other amounts received (without regard to whether
or not an amount is paid in cash) for personal services actually rendered
in the course
12
<PAGE> 13
of employment with the Company, limited by section 401(a)(17) of the Code
($235,840 in 1993), to the extent that the amounts are includable in gross
income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Treasury regulations section
1.62-2(c)), and excluding the following:
(a) Employer contributions to a plan of deferred compensation
which are not includable in the Employee's gross income for the taxable
year in which contributed, or Company contributions under a simplified
employee pension plan to the extent such contributions are deductible by
the Employee, or any distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk
of forfeiture;
(c) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(d) other amounts which received special tax
benefits, or contributions made by the Company (whether or not under a
salary reduction agreement) towards
13
<PAGE> 14
the purchase of an annuity contract described in section 403(b) of the Code
(whether or not the contributions are actually excludable from the gross
income of the Employee).
1.35 Tandem: Tandem Computers Incorporated.
1.36 Trust Agreement: The agreement or agreements entered into by
Tandem and the Trustee to provide the benefits payable under this Plan.
1.37 Trustee: Such person or persons, including any successor or
successors thereto, designated by the Board of Directors of Tandem, to act
as Trustee of the trust and to hold the trust assets in accordance with the
provisions of the Trust Agreement.
1.38 Valuation Date: The last day of each month, or any more frequent
period prescribed by Tandem. However, for purposes of determining the
amount of withdrawals or distributions, the valuation Date shall be the
last day of each calendar month coinciding with or immediately following
the relevant event (such as, but not limited to, termination of employment
or death) unless Tandem designates a different valuation date specifically
for the purpose of withdrawals and/or distributions.
1.39 W-2 Adjusted Compensation: wages as defined in section 3401(a) of
the Code and all other payments of compensation to an Employee by the
Company (in the course of the Company's trade or business) for which the
company is required to furnish the Employee a written statement
14
<PAGE> 15
under sections 6041 (d) and 6051 (a) (3) of the Code, computed without
regard to any limits under section 3401(a) of the Code based an the nature
or location of the employment or the services performed. For purposes of
this Plan, W-2 Adjusted Compensation shall include amounts contributed by
the Company pursuant to a salary reduction agreement and which is not
includable in the gross income of the Employee under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
ARTICLE II ELIGIBILITY AND MEMBERSHIP
2.1 Eligibility. Each Employee shall be eligible to become a Member on
the first Enrollment Date (or as soon thereafter as is administratively
practicable) after the date he or she files with Tandem a form or forms
prescribed by Tandem on which he or she:
(a) Makes an election to defer Compensation, pursuant to Section
3.1;
(b) Authorizes the company to reduce his or her Compensation; and
(c) Makes an investment election pursuant to Section 4.2.
2.2 Reemployment of Former Employees and Former Members. Any person
reemployed by the Company as an Employee shall be eligible to become a
Member of the Plan upon the Enrollment Date coincident with or immediately
following the date he or she is re-employed.
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<PAGE> 16
2.3 Transferred Members. A Member who
(i) remains in the employ of the Company or an Affiliated
Company but ceases to be an Employee,
(ii) is on temporary assignment to a partnership or joint
venture in which the Company is a partner or member, or
(iii) is otherwise assigned by the Company to an employer
which is not an Affiliated Company and in a position which is designated by
Tandem as a transfer for purposes of this Section 2.4, shall continue to be
a Member of the Plan but shall not be eligible to make deferred
contributions or to receive allocations of Company Matching Contributions
or Company Profit Sharing Contributions while his or her employment status
is other than as an Employee.
2.4 Termination of Membership. Except as otherwise provided in Section
2.4, an Employee who has become a Member shall remain a Member until his or
her employment with the Company and all Affiliated Companies terminates,
or, if later, until his or her entire Account balance is distributed.
However, a Member who is not an Employee shall not make any contributions
to the Plan; have any contributions made to the Plan on his or her behalf;
or (unless he or she is a party-in-interest as defined in ERISA) borrow any
amounts from the Plan.
ARTICLE III CONTRIBUTIONS.
3.1 Deferred Contributions.
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<PAGE> 17
(a) Elective Deferrals. Prior to the date an Employee becomes a
Member, subject to the limitations of Sections 3.7 and 3.8 he or she may
voluntarily elect on a form prescribed by Tandem to have his or her
subsequent Compensation reduced and contributed to the Plan by the Company
as Deferred Contributions. Subject to other provisions of this Article, the
amount of Deferred Contributions made on behalf of a Member shall be not
less than 1% and not more than 18% of his or her compensation, in multiples
of 1% as elected by the Member. In addition, the amount of a Deferred
Contribution made on behalf of any Member for any calendar year shall not
exceed the Section 401(k) Ceiling. The Deferred Contributions shall be paid
to the Trustee as soon as administratively practicable.
(b) Excess Deferrals. Notwithstanding the foregoing, Tandem in
its discretion (i) may suspend or limit any Member's Deferred Contributions
at any time in order to prevent the cumulative amount of the Deferred
Contributions contributed on behalf of the Member for any calendar year
from exceeding the Section 401(k) Ceiling, and (ii) may (but shall have no
obligation whatsoever to) cause any Excess Deferral for that Plan Year
(with or without any income allocable to such amount) to be distributed to
the Member in accordance with section 402(g)(2)(A)(ii) of the Code. In the
event any Excess Deferral is distributed pursuant to this subsection
3.1(b), the amount of the distributed Excess Deferral shall be reduced by
the amount of any Excess Contribution previously distributed for the same
Plan Year.
3.2 Company Matching Contributions.
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<PAGE> 18
(a) Match A. Each Plan Year, the Company shall contribute out of
its Profits for each payroll period for each Member who is an Employee of
the Company (other than Ungermann Bass, Inc.) and who elects to have
Deferred Contributions made on his or her behalf under Section 3.1, an
amount equal to 100% of the Member's Deferred Contribution up to the
following:
<TABLE>
<CAPTION>
- ------------------------------------------------------ -----------------------------------------------------
Contribution Matching Cap
- ------------------------------------------------------ -----------------------------------------------------
<S> <C>
1% 1% of Compensation
2% 11/2% of Compensation
3% 2% of Compensation
4% or more 21/2% of Compensation (subject to a minimum matching
contribution of $600
- ------------------------------------------------------ -----------------------------------------------------
</TABLE>
In the event a Match A contribution to a Member is limited by a Member's
ability to contribute Deferred Contributions because the Member's Deferred
Contributions have reached the Section 401(k) Ceiling for the calendar
year, the amount of Match A contributions which would have been made to the
Member on Deferred Contributions in excess of the Section 401(k) Ceiling
shall be made to the Member's Company Account in the first month of the
following Plan Year; provided that the Member is employed by the Company at
the end of the first month of the following Plan Year.
(b) Match B. The Company shall match the Deferred Contributions
of each Member who is an employee of Ungermann Bass,Inc. in an amount equal
to such Deferred contributions up to a maximum of $400 in any Plan Year.
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<PAGE> 19
(c) Match C. In addition to the matching contributions in
paragraphs (a) and (b) above, the Company may, in its discretion, make
additional matching contributions for each Member, in such amounts as the
company's Board of Directors shall determine.
(d) Except as provided in paragraph (a) above, Company Matching
Contribution Match A, Match B and/or Match C shall be paid to the Trustee
at the same time or as soon as practicable after the Member's Deferred
Contributions are paid to the Trustee, but in no event later than the due
date for filing the Company's federal income tax return (including
extensions) for the Plan Year.
3.3 Company Profit Sharing Contributions.
(a) The Board of Directors of each Affiliated Company
participating in the Plan shall determine the amount, if any, of Company
Profit Sharing contributions to be made to the Plan for each Plan Year to
be allocated among its eligible Employees. Company Profit Sharing
Contributions of an Affiliated Company for any Plan Year may be made in one
or more payments at any time; provided the total amount of any such
contribution for any Plan Year shall be paid to the Trustee not later than
the date on which the Affiliated Company's income tax return is required to
be filed, including any extensions for filing obtained. For all purposes of
the Plan, Company Profit Sharing Contributions shall be subject to the
distribution limitations of Article VIII. Company Profit Sharing
Contribution amounts allocated to a Member's Company Account
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<PAGE> 20
shall not be eligible for hardship distribution under Section 6.2 of the
Plan.
(b) Neither the Trustee nor any Member shall have any right or
duty to inquire into the amount of the Company Profit sharing Contribution
or the method used in determining the amount of the Company Profit Sharing
Contribution. The Trustee shall be accountable only for funds actually
received by the Trustee.
(c) Company Profit Sharing Contributions, if any, made by each
Affiliated Company with respect to a Plan Year shall be allocated as
follows:
(i) Company Profit Sharing Contributions shall be allocated
among the Company Accounts of all eligible Employees who were employed by
the Affiliated Company during the Plan Year in proportion to their
Compensation from the Affiliated Company for such Plan Year.
(ii) Notwithstanding the foregoing, the Administrator may,
with respect to a Plan Year, allocate Company Profit Sharing Contributions
to such Members and in such a manner as it deems necessary or appropriate
to satisfy the test of Section 3.7(a).
3.4 Member Rollover Contributions.
(a) Rollovers Allowed. Without regard to any limitations on
contributions set forth in Section 3.7 or 3.8, the Plan may receive:
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<PAGE> 21
(i) a Direct Rollover, in the form of cash, from an Eligible
Retirement Plan on behalf of a Member; or
(ii) from a Member, in cash, any Eligible Rollover
Distribution amount previously received by him or her from a tax qualified
plan within 60 days after such receipt.
The rollover contributions shall be paid to the Trustee as soon
as practicable. All amounts attributable to rollover contributions shall be
held in a separate account under this Plan.
(b) Nonqualifying Rollovers. If it is later determined that a
transfer to the Plan did not in fact qualify as a tax free rollover under
the Code, then the balance credited to the Member's Rollover Account shall
immediately be (i) segregated from all other Plan assets, (ii) treated as a
nonqualified trust established by and for the benefit of the Member, and
(iii) distributed to the Member. Such a nonqualifying rollover shall be
deemed never to have been a part of the Plan.
3.5 Change in Contributions. The percentage of Compensation designated
by a Member under Section 3.1 shall automatically apply to increases and
decreases in his or her Compensation. Subject to the provisions of Section
3.1, a Member may change the percentage of his or her authorized
Compensation reduction on a form prescribed by Tandem, to be effective as
of the first day of the following pay period, or as soon thereafter as is
administratively practicable.
3.6 Revocation of Contributions. A Member may revoke
21
<PAGE> 22
his or her election under Section 3.1 any time by written notice to Tandem.
The revocation shall become effective as soon as practicable after its
receipt by Tandem. A Member who has revoked his or her election under
Section 3.1 may apply, on a form prescribed by Tandem, to have his or her
Compensation reduction resumed in accordance with Section 3.1 on the first
day of the following pay period, or as soon thereafter as is
administratively practicable.
3.7 Limitations Affecting Highly Compensated Employees.
(a) Actual Deferral Percentage Limitation. The Actual Deferral
Percentage ("ADP") for Highly Compensated Employees who are Members or who
are eligible to become Members shall not exceed the ADP for all other
Employees who are Members or eligible to become Members multiplied by 1.25.
If the ADP for Highly Compensated Employees exceeds the ADP for all other
Employees who are Members or eligible to become Members by no more than two
percentage points, the 1.25 multiplier in the preceding sentence shall be
replaced by 2.0.
(b) (1) Determination of Excess Contributions. The amount of
Excess Contributions for a Highly compensated Employee will be determined
in the following manner:
(i) First, the ADP of the Highly Compensated Employee with
the highest ADP shall be reduced to the extent necessary to satisfy the ADP
test or cause such percentage to equal the ADP of the Highly Compensated
Employee with the next highest percentage.
(ii) Second, this process shall be
22
<PAGE> 23
repeated until the ADP test is satisfied. The amount of Excess
Contributions for a Highly Compensated Employee is then equal to the total
of elective and other contributions taken into account for the ADP test
minus the product of the Member's ADP, as determined above, and the
Member's W-2 Adjusted compensation.
(b) (2) Determination of Excess Contributions Under the Family
Aggregation Rules. In the case of a Highly Compensated Employee whose ADP
is determined under the family aggregation rules, the amount of Excess
Contributions shall be determined in the following manner:
(i) If the Highly Compensated Employee's ADP is determined
by combining the contributions and W-2 Adjusted Compensation of all family
members, then the ADP is reduced in accordance with the "leveling" method
described in section 1.401(k)l(f)(2) of the regulations. Excess
Contributions for the family unit are allocated among the family members in
proportion to the contributions of each family member that have been
combined.
(ii) If the Highly Compensated Employee's ADP is determined
by combining the contributions and W-2 Adjusted Compensation of only those
family members who are highly compensated without regard to family
aggregation, then the ADP is reduced in accordance with the leveling method
but not below the ADP of eligible nonhighly compensated family members.
Excess Contributions are determined by taking into account the
contributions of the eligible family members who are highly compensated
without regard to family aggregation and are allocated among such family
members in proportion to their contributions.
(c) Correction Concerning Actual Contribution Percentage.
23
<PAGE> 24
(i) Tandem, in its discretion, to the extent practicable,
may reduce the amounts elected by Highly Compensated Employees under
Section 3.1 to avoid having an Excess Contribution for the Plan Year. Such
reduction shall occur before amounts are contributed to the Plan. Highly
Compensated Employees with the highest percentage elections under Section
3.1 shall have their elections reduced first to the extent deemed necessary
to avoid an Excess Contribution.
(ii) To the extent Excess Contributions are made to the
Plan, the Excess Contributions plus any income allocable thereto
(determined in accordance with Treasury Regulations) and minus any excess
deferrals previously distributed for the same Plan Year shall be
distributed to Highly Compensated Employees.
(iii) Should the Plan still fail to meet the requirements of
paragraph (a) of this Section as of the last day of any Plan Year, then the
Company may make a special contribution to the Plan on account of that Plan
Year in an amount sufficient, taking into account the next sentence, for
the Plan to meet Section 3.7(a). Such special contributions shall be
considered as qualified nonelective contributions under section 401(k) of
the Code. In no event, however, shall the Company's contributions for any
year exceed the maximum amount deductible from the Company's income for
that year under section 404(a)(3)(A) of the Code. The special contributions
shall be made only from the Profits of the Company and shall be paid to the
Trustee no later than the due date for filing the Company's federal income
tax return (including extensions) for the Plan Year.
3.8 Maximum Annual Additions. (a) For any Plan Year, which shall be
considered
24
<PAGE> 25
The "limitation year" for purposes of section 415 of the Code, the annual
addition to a Member's Accounts when added to the Member's annual addition
for that Plan Year under any other qualified defined contribution plan of
the Company or an Affiliated Company, shall not exceed an amount which is
equal to the lesser of (i) 25% of his or her Section 415 Compensation for
that Plan Year, or (ii) $30,000 or if greater, one-fourth of the defined
benefit dollar limitation set forth in section 415(b) (1) of the Code as in
effect for the limitation year.
(b) Tandem, in its discretion, based on projected Compensation
for any Member for a Plan Year, may limit (i) the amount of Deferred
Contributions made by the Member, or (ii) Company Profit Sharing
Contributions which would have been allocated to the Member's Company
Account, in order to comply with the limitation of paragraph (a) above.
(c) If the annual addition to a Member's Accounts for any Plan
Year, prior to the application of the limitation set forth in paragraph (a)
above, exceeds such limitation, the amounts of contributions credited to
the Member's Accounts under this Plan for such Plan Year shall be adjusted
to the extent necessary to satisfy such limitation in accordance with the
following order of priority:
(i) The Member's Deferred contributions for such Plan Year
which were not matched by Company contributions pursuant to Section 3.2
shall be reduced.
(ii) The Member's Deferred Contributions which were matched
by Company contributions and corresponding company Matching contributions
shall be reduced pro rata.
(iii) The Member' s Company Profit Sharing Contributions
shall be reduced.
(iv) The amount of any adjustment
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<PAGE> 26
described in (i), (ii) and (iii) above together with any investment
earnings thereon, shall be used to reduce the Member's Deferred
Contributions for future Plan Years and allocated to the Member's Account
for such years. If the Member is not covered by the Plan in future Plan
Years, the excess amounts shall be used to reduce Company Matching
Contributions in future Plan Years. The Member shall make no Deferred
contributions nor shall the Company make any Matching Contributions as long
as any unallocated adjustments described in (i) and (ii) above remains. If
any such excess is actually used to reduce Company Matching Contributions,
the Company shall pay the affected Member an amount equal to this
reduction.
(d) For purposes of this section, the "annual addition" to a
Member's Accounts under this Plan or any other qualified defined
contribution plan maintained by the company or an Affiliated Company shall
be the sum of:
(i) The total of contributions made under this Plan and any
other such qualified defined contribution plan, excluding any rollover
contributions, and
(ii) Forfeitures, if any, that have been allocated to the
Member's Accounts for the Plan Year.
(e) All defined contribution plans (terminated or not) maintained
by the Company or an Affiliated Company shall be considered as one plan in
applying the limitations of this Section.
(f) Employee Stock Ownership Plan Rules. In applying the
limitations of this Section with another qualified defined contribution
plan that is an employee stock ownership plan, the special limitation
applicable to employee stock ownership plans under section 415(c) (6) of
the Code shall be taken into account with respect to a Member who
participates in any such plan.
26
<PAGE> 27
(g) Defined Benefit Plans. If any Member participates in both
this Plan and one or more defined benefit plans maintained by the Company
or an Affiliated company (including any terminated plan), then the sum of
the following two fractions cannot exceed 1.0:
(Projected annual benefit (determined as of the close of the
Plan Year) of the Member under all such defined benefit
plans
(divided by)
The lesser of (1) the product of 1.25 multiplied by the
dollar limitation in effect under section 415(b)(1)(A) of
the Code for such Plan Year, or (2) the product of 1.4
multiplied by the amount which may be taken into account
under section 415(b)(1)(B) with respect to such Member for
such Plan Year)
plus
(Sum of annual additions to such Member's account under all
Company and Affiliated Company defined contribution plans as
of the close of the Plan Year and for all prior Plan Year
(divided by)
The sum of the lesser of the following amounts determined
for such Plan Year and for each prior year of service with
the company and any Affiliated Company: (1) the product of
1.25 multiplied by the dollar limitation in effect under
section)
27
<PAGE> 28
415(c)(1)(A) for such Plan Year (determined without regard
to subsection (c)(6)), or (2) the product of 1.4 multiplied
by 25 percent of the Member's Section 415 Compensation for
such Plan Year.)
If the sum of these two fractions would exceed 1.0 without an adjustment of
benefits under the defined benefit plan or plans, then the Member's
benefits under the defined benefit plan or plans will be limited to the
extent required to ensure that the sum of these two fractions does not
exceed 1.0 and to the extent allowed under the Code. If the annual
additions to a Member's Accounts would still exceed the limitations of this
paragraph (e), the provisions of paragraph (b) shall be applied to the
extent necessary.
For any Plan Year in which the Plan is a Top- Heavy Plan as
defined in section 11.1, the number "1.0" shall be substituted for the
number "1.25" wherever it appears above.
(h) Adjustments. If, as a result of a reasonable error in
estimating a Member's Section 415 Compensation, or other circumstances
which permit the application of this rule under section 415 of the Code,
any of the limitations of this Section otherwise would be exceeded with
respect to any Member for any Plan Year, then the following actions, but
only to the extent necessary to avoid exceeding such limitations, shall be
taken in the following order:
(i) The Member's accrued benefit under any defined benefit
plan shall be frozen and/or the rate of its future accrual shall be
reduced;
(ii) The method set forth in Section 3.8(b) shall be
followed; and
(iii) Any excess annual addition under
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<PAGE> 29
this Section to the extent not covered by (ii) above shall be reallocated
to the suspense account, and the balance credited to such account shall be
applied to reduce the Company contributions authorized to be made for and
allocated to all eligible Members in the Plan for succeeding Plan Years in
order of time.
Suspense accounts established under this paragraph (g) shall not
share in allocations of earnings and gains (or losses) of any Trust funds.
The balances credited to all suspense accounts shall be returned to the
Company upon termination of the Plan.
3.9 Return of Contributions. The Company may request a return, and
this Section shall not prohibit return, of an amount to the Company under
any of the following circumstances:
(a) All contributions to this Plan are made on the condition that
they are deductible by the Company under section 404 of the Code. If all or
part of the Company's deductions under section 404 of the Code for
contributions to the Plan are disallowed by the Internal Revenue Service,
the portion of the contributions to which that disallowance applies shall
be returned to the Company, increased by any gains or reduced by any
investment loss attributable to those contributions. The return shall be
made within one year after the disallowance of deduction.
(b) The Company may recover the amount of its contributions to
the Plan made on account of a mistake in fact, reduced by any investment
loss attributable to those contributions, if recovery is made within one
year after the date of those contributions.
(c) In the event that Deferred Contributions made under Section
3.1 are returned to the Company in accordance with the provisions of this
Section, the elections to reduce
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<PAGE> 30
Compensation which were made by Members on whose behalf those contributions
were made shall be void retroactively to the beginning of the period for
which those contributions were made. The Deferred Contributions so returned
shall be distributed in cash to those Members for whom such contributions
were made; provided, however, that if the contributions are returned under
the provisions of paragraph (a) above, the amount of Deferred Contributions
to be distributed to Members shall be adjusted to reflect any investment
gains or losses attributable to those contributions.
ARTICLE IV INVESTMENT OF CONTRIBUTIONS.
Each Member shall have the right to direct the investment of any
or all of his or her Accounts among such investments as are authorized by
the Plan Administrator, as follows: Subject to such procedural guidelines
as the Plan Administrator shall from time to time establish, each Member
may file a written investment direction with the Plan Administrator (or
directly with the Trustee if so instructed by the Plan Administrator) that
specifies the manner in which his or her Accounts are to be invested;
provided, however, that no Member may direct any assets of his or her
Accounts to the purchase of life insurance, or into the purchase of life
annuity contracts. The Plan Administrator shall prescribe dates as of which
investment directions shall be effective and time periods within which
written investment directions must be filed with the Plan Administrator. An
investment direction shall continue to apply until a subsequent written
direction is filed with the Plan Administrator (or with the Trustee). If
received by the Plan Administrator, the Plan Administrator shall forward
investment directions to the Trustee (or to such third party as the Plan
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<PAGE> 31
Administrator and the Trustee shall designate) in order to implement the
Member's directions.
ARTICLE V VALUATION OF ACCOUNTS AND VESTING.
5.1 Introduction - Fund Accounting and Share Accounting. Some of the
Investment Funds may be operated using "fund accounting" and some may be
operated using "share accounting." With fund accounting, Members' interests
in the Fund will be recorded as a portion of the Fund's total value at such
Valuation Date. With share accounting, Members' interests in the Fund will
be recorded as an interest in a stated number of shares in the Fund, and
those shares will be valued at each Valuation Date and more frequently as
is administratively feasible. To the extent possible, Tandem intends to
make available Funds with share accounting.
5.2 Valuation of Shares. The value of a share in a Fund using share
accounting shall be determined at fair market value on each Valuation Date
and more frequently as is administratively feasible.
5.3 Valuation of Funds. The value of that portion of a Member's
Account invested in a Fund that uses fund accounting shall be determined by
adding (i) the valuation of that portion of the Member's Accounts invested
in such Fund, as determined on the prior valuation Date, (ii) contributions
and loan repayments credited to the Member's Accounts during the valuation
period and (iii) the investment experiences credited to the Member's
Accounts pursuant to Section 5.5, below, and subtracting any distributions
from the Accounts made during the valuation period.
5.4 Crediting Accounts When Investments are Made in Funds with Share
Accounting. To the extent that a Member's Accounts are invested in Funds
that use share accounting, the
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<PAGE> 32
Member's Accounts shall be credited with the number of shares acquired with
the relevant amount of the Deferred Contributions, Company Matching
Contributions and/or Company Profit Sharing Contributions made to that Fund
on behalf of the Member, or rollover contributions (if any), valued on the
actual date that such shares are actually acquired by the Trustee.
5.5 Crediting Accounts When Investments are Made in Funds with Fund
Accounting. The following rules shall apply for crediting the Accounts of
Members with investment gains or losses to the extent such Accounts are
invested in a Fund with fund accounting. Such Accounts shall be credited
with a pro rata portion of the losses or gains experienced by the Fund,
determined on the last day of the valuation period. This pro rata portion
of investment losses or gains shall be determined by the Fund during the
valuation period by the following fraction: The numerator shall be the
Member's Account balance invested in the Fund as of the last day of the
valuation period and the denominator shall be the current market value of
Plan assets invested in the Fund, as determined by the Trustee on the
valuation Date. The current market value of the assets in the Fund shall be
determined by the Trustee after payment out of that Fund of all brokerage
fees and transfer taxes applicable to purchases and sales for that Fund
since the last Valuation Date.
5.6 Vested Portion of Accounts. A member shall at all times be 100%
invested and have a nonforfeitable right to all Accounts held for his or
her benefit.
5.7 Statements to Members. At least once a calendar Quarter each
Member shall be furnished with a statement setting forth the value of his
or her Accounts.
ARTICLE VI WITHDRAWALS WHILE STILL EMPLOYED.
6.1 Withdrawal After Age 59-1/2. A Member who shall
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<PAGE> 33
have attained age 59-1/2 as of the effective date of any withdrawal
pursuant to this Section may, without penalty and no more than once in any
Plan Year, elect to withdraw all or part of his or her Accounts. The
minimum withdrawal shall be $500, or the value of the Member's Accounts, if
less.
6.2 Hardship Withdrawal.
(a) A Member may, without penalty and no more than once in any
Plan Year, elect to withdraw all or part of the value of his or her
Deferred Account (including (i) any earnings thereon accrued prior to
January 1, 1989, and/or (ii) Company Matching Contributions which were 100%
vested at the time of contribution allocated prior to January 1, 1989) upon
furnishing to Tandem proof of financial hardship that creates an immediate
and heavy financial need as determined by Tandem under rules uniformly
applicable to all Members similarly situated. The amount to be withdrawn,
net of any income taxes withheld, shall not exceed the amount required to
meet such immediate financial need created by the hardship and not
reasonably available from other resources reasonably available to the
Member.
(b) For purposes of this Section, "hardship" shall include the
need to pay the following items:
(i) Expenses incurred or necessary for medical care
described in section 213(d) of the Code for the Member, his or her spouse,
or any dependents of the Member (as defined in section 152 of the Code);
(ii) Cost (excluding mortgage payments) relating to the
purchase of a principal residence for the Member;
(iii) Payment of tuition and related educational fees for
the next twelve months of post-secondary education for the Member, his or
her spouse, children, or dependents; or
33
<PAGE> 34
(iv) The need to prevent the eviction of the Member from his
or her principal residence or foreclosure on the mortgage of the Member's
principal residence.
(c) A hardship withdrawal shall not be made unless:
(i) The Member has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained
by the Company;
(ii) The Member is prohibited from making Deferred
Contributions to this Plan for twelve months after the receipt of the
hardship distribution. In addition, the member must be prohibited, under
the terms of the Plan, or by an otherwise legally enforceable agreement,
from making elective contributions and employee contributions to all other
plans of the Company for at least twelve months after receipt of the
hardship distribution;
(iii) The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution); and
(iv) All plans maintained by the Company limit the Member's
Deferred Contributions for the taxable year immediately following the
taxable year of the hardship distribution to the applicable limit under
section 402(g) of the Code for such taxable year, less the amount of such
Member's Deferred Contributions for the taxable year of the hardship
distribution.
6.3 Procedures and Restrictions. To make a withdrawal, a Member shall
give written notice to Tandem. A withdrawal under Section 6.1 or 6.2 shall
be based on the value of the Member's Deferred Account (and, if applicable
earnings
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<PAGE> 35
and Company Matching Contributions as described in Section 6.2(a)) as of
the most recent Valuation Date. The amount of the withdrawal shall be first
(on a proportional basis) from the Investment Funds which use share
accounting in which the Member's Deferred Account is invested and only
after the amounts in such Funds are depleted shall a withdrawal be made
from any other Funds. The amount of the withdrawal under Section 6.1 and,
if applicable, Section 6.2, shall be deducted from the applicable
Investment Funds on a proportional basis from the Member's Accounts. All
payments under this Article shall be made in cash as soon as practicable.
Notwithstanding anything in this Section to the contrary, effective as of
January 1, 1993, hardship distributions will be subject to the withholding
and notice requirements described in Section 8.3.
ARTICLE VII LOANS TO MEMBERS
(a) The Plan Administrator may authorize a loan or loans to
currently employed Members, or parties in interest (as defined in ERISA) of
the Plan who are Members or Beneficiaries, provided that such loans:
(i) are available to all such Members and Beneficiaries on a
reasonably equivalent basis;
(ii) are not made available to Highly Compensated Employees,
officers or shareholders in an amount greater than the amount made
available to other Employees;
(iii) bear a reasonable rate of interest;
(iv) are adequately secured; and
(iv) no loan shall exceed the present value of the Member's
or Beneficiary's vested accrued benefit.
(b) In the event of default, foreclosure on
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<PAGE> 36
the note and attachment of security will not occur until a distributable
event occurs under the Plan.
(c) All such loans shall be available to Members and
Beneficiaries without regard to any individual's race, color, religion,
sex, age or national origin. All such loans shall further be subject to
ERISA, the Code, the regulations and rulings thereunder, and to such terms
and conditions not inconsistent therewith (and subject to this Section) as
the Plan Administrator shall determine pursuant to uniform policies and
guidelines adopted by the Plan Administrator. Such policies and guidelines
shall be in writing and (i) may be amended by the Plan Administrator from
time to time (ii) shall be communicated to all affected Members and
Beneficiaries, and (iii) shall be deemed a part of this Plan.
ARTICLE VIII DISTRIBUTION OF ACCOUNTS
8.1 Eligibility. Upon the termination of employment of a Member from
the Company or any Affiliated Company for any reason, the entire balance to
the credit of the Member's Accounts, determined as of the Valuation Date
immediately preceding the date of distribution, shall be distributed as
provided in Section 8.2, subject, however, to the provisions of Section
8.3, if applicable.
8.2 Method of Distribution. The balance to the credit of a Member's
Accounts shall be made in one single sum as soon as practicable after the
date of termination of employment, and except as provided in Section 8.1(b)
and subject to the provisions of Section 8.3, not later than the 60th day
after the close of the Plan Year in which the Member's termination of
employment occurs. No payment will be made following termination of
employment unless the Member (or if applicable, the Member's Beneficiary)
consents in writing. If a Member (or
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if applicable, his or her Beneficiary) fails to consent in writing, the
Member's distribution will be deferred until the date which is the member's
Normal Retirement Date under the Plan, or such earlier date of distribution
to which the Member (or if applicable, his or her Beneficiary) consents.
Distributions may be in the form of a single sum payment or in installments
over a fixed period of years as elected by the Member (or if applicable,
his or her Beneficiary) . Such fixed period of years shall not exceed the
maximum period permitted by section 401(a)(9) of the Code and shall be
determined in a manner that satisfies Treasury Regulation 1.401(a)(9)-2,
Q&A 4(a). Distribution of a Member's Accounts shall begin not later than
April 1 of the calendar year following the calendar year in which he or she
attains age 70-1/2.
Any additional company contributions allocated to the Member for the
Plan Year in which the Member terminates his or her employment for any
reason and for which a distribution is requested, or the preceding Year
Plan, if applicable, shall be paid to the Member (or if applicable, his or
her Beneficiary) as soon as practicable after the contributions have been
made, subject to the provisions of Section 8.3, if applicable.
8.3 Direct Rollovers and Withholding Notice:
(a) Effective Date: The provisions of this Section shall apply to
all distributions from the Plan made on or after January 1, 1993.
(b) General Rule: If the Distributee of any Eligible Rollover
Distribution elects to have the Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan, and specifies the Eligible
Retirement Plan to which the Eligible Rollover Distribution is to be paid,
then the Eligible Rollover Distribution will be paid to that Eligible
Retirement Plan in a Direct Rollover.
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(c) Mandatory Withholding: If a Distributes of an Eligible
Rollover Distribution does not elect to have the Eligible Rollover
Distribution paid directly from this Plan to an Eligible Retirement Plan in
a Direct Rollover under section 401(a)(31) of the Code, the Eligible
Rollover Distribution will be subject to applicable federal and state
income tax withholding.
(d) Notice Requirement: In the manner and to the extent required
by applicable regulations, the Plan Administrator shall provide each
Distributee of an Eligible Rollover Distribution, prior to making an
Eligible Rollover Distribution, with a written explanation of the
Distributee's right to elect a Direct Rollover and the withholding
consequences of not making the election.
8.4 Beneficiary. Each Member shall have the right by written notice
delivered to Tandem before the Member's death to name, or to change, one or
more Beneficiaries to receive, in the event of the Member's death, his or
her Accounts which have not been distributed. The name of the Beneficiary
shall be held on file by Tandem. If the Beneficiary of a married Member is
other than his or her spouse, the designation must be signed by both the
Member and his or her spouse and witnessed by a Plan representative or
notary public, unless those requirements are waived by Tandem in accordance
with applicable law. In the event no such designation is in effect at the
time of death of the Member, or if no person, persons or entity so
designated shall survive the Member, the Member's Beneficiary shall be the
following person or persons living on the date of distribution in
descending order of priority: (i) the Member's spouse, or (ii) the Member's
children, in equal shares. If none of the persons specified in the
preceding sentence are living on the
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<PAGE> 39
date of distribution, the Member's Beneficiary shall be his or her estate.
8.5 Proof of Death and Right of Beneficiary or Other Person. Tandem may
require and rely upon such proof of death and such evidence of the right of
any Beneficiary or other person to receive the value of the Accounts of a
deceased Member as Tandem may deem proper and its determination of death
and of the right of that Beneficiary or other person to receive payment
shall be conclusive. 8.6 Disability. Upon a determination of Disability by
the Plan Administrator, the entire balance to the credit of a Member's
Accounts shall be distributed as provided in Section 8.2, subject to the
provisions of Section 8.3, if applicable. However, in applying Section 8.2
in the case of a Disability distribution, the date of the Plan
Administrator's determination of the Member's Disability shall be
substituted for the date the Member terminates employment in applying
Section 8.2.
ARTICLE IX FIDUCIARY RESPONSIBILITIES; PLAN ADMINISTRATION; CLAIMS AND REVIEW
PROCEDURES.
9.1 Named Fiduciary for Plan Administration. Tandem is the named
Fiduciary which has the authority to control and manage the operation and
administration of the Plan, and is the "Plan Administrator" and the "Plan
sponsor" as such terms are used in ERISA. Tandem shall make such rules,
regulations, interpretations and computations and shall take such other
action to administer the Plan as it may deem appropriate. In administering
the Plan, Tandem shall act in a nondiscriminatory manner to the extent
required by section 401 and related sections of the Code and shall at all
times discharge its duties with respect to the Plan in accordance with the
standards set forth in section 404(a)(1) of ERISA.
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9.2 Named Fiduciary for Management of Plan Assets. Tandem is the named
Fiduciary with respect to the control and management of the assets of the
Plan only to the extent of (i) having the duty to appoint one or more
Trustees to hold the assets of the Plans in trust and to enter into a trust
agreement with each such Trustee with respect to the assets held in trust
thereunder, (ii) having the authority to remove any Trustee so appointed
and to appoint one or more successor Trustees, (iii) having the authority
to appoint one or more qualified investment managers for any assets of the
Plan and to enter into a contract with each such investment manager with
respect to the management of the assets assigned to such investment manager
and (iv) having the authority to select one or more Investment Funds. Each
Trustee so appointed shall have the exclusive authority and discretion to
manage and control the assets of the Plan it holds in trust, except to the
extent that the authority to manage, acquire and dispose of such assets is
allocated by Tandem to one or more investment managers or except to the
extent that Tandem has designated all of the Investment Funds that may be
selected by Members. Each investment manager so appointed shall have the
power to manage, including the power to dispose of such assets of the Plan
as are assigned to it by Tandem.
9.3 Service in Several Fiduciary Capacities. Nothing herein shall
prohibit any person or group of persons from serving in more than one
Fiduciary capacity with respect to the Plan (including service both as Plan
Administrator and Trustee).
9.4 Duties and Responsibilities of the Plan Administrator. The duties
and responsibilities of Tandem under the Plan (which are not delegated
pursuant to Section 9.5) shall be carried out on its behalf by its
directors, officers, employees and agents, acting in their capacities as
directors, officers, employees, and agents and not as individual
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<PAGE> 41
fiduciaries. Tandem may engage the services of such persons or
organizations to render advice or perform services with respect to its
duties and responsibilities under the Plan as it may determine to be
necessary or appropriate. Such persons or organizations may include, but
shall not be limited to, actuaries, attorneys, accountants, administrators
and consultants.
9.5 Delegation of Fiduciary Responsibilities. In lieu of carrying out
any of its Fiduciary responsibilities under the Plan (pursuant to Section
9.4), Tandem may delegate its Fiduciary responsibilities (except "Trustee
responsibilities" as defined in ERISA) to any person or persons pursuant to
a written contract with such other person which specifies the Fiduciary
responsibilities so delegated. Except as provided in Sections 9.11 and
13.1, however, Tandem is specifically prohibited from designating any of
its directors, officers or Employees as a Fiduciary and from delegating to
any such individual any of Tandem's Fiduciary responsibilities under the
Plan.
9.6 Expenses of the Plan. The Company shall pay all expenses of the
Plan, except such expenses as are paid out of the funds of the Plan
pursuant to the terms of the trust agreement.
9.7 Cash Requirements. From time to time, Tandem shall estimate the
benefits and administrative expenses to be paid out of the funds of the
Plan during the period for which such estimate is made and shall also
estimate the Company contributions to be made to the Plan during such
period by the Company. Tandem shall inform the Trustee of the estimated
cash needs of the Plan during the period for which such estimates are made.
Such estimates shall be made on an annual, quarterly, monthly or other
basis as Tandem shall determine.
9.8 Independent Accountant. Tandem shall engage an
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independent qualified public accountant to conduct such examinations and to
render such opinions as may be required by section 103(a)(3) of ERISA.
Tandem may remove and discharge the person so engaged, but in such case it
shall engage a successor independent qualified public accountant to perform
such examinations and to render such opinions.
9.9 Claims for Benefits.
(a) Benefit Claim Requirement. Subject to the notice requirements
of Section 8.3, if applicable, and except as required by section 401(a)(9)
of the Code, no benefit will be paid to or on behalf of a Member under the
Plan until the Member (or the Member's Beneficiary) has filed a claim for
benefits on a form approved by Tandem which contains all information which
Tandem may need to determine the amount of any payment due hereunder.
(b) Effect of Late Claim. if a properly completed claim for
benefits has not been filed at least ninety (90) days before the date as of
which payment of the benefit payable to or an behalf of a Member is to be
made, the payment of such benefit may be delayed for administrative
reasons.
(c) Prescribed Forms; Address. All claims for benefits under the
Plan must be made in writing on the form(s) prescribed by Tandem and must
be signed by the member or his or her Beneficiary, as appropriate. All
claims for (or inquiries concerning) benefits under the Plan shall be
submitted to Tandem and shall be addressed as follows: Tandem Computers
Incorporated, Plan Administrator, 401(k) Investment Plan, 19333 Vallco
Parkway, Cupertino, CA 95014-2599.
9.10 Denial of Claim. In the event any claim for benefits or
application for a loan or withdrawal is denied, in whole or in part, Tandem
shall notify the claimant of such denial in writing and shall advise the
claimant of his or her
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right to appeal the denial. Such written notice shall set forth, in a
manner calculated to be understood by the claimant, specific reasons for
the denial, specific references to the Plan provisions on which the denial
is based, a description of any information or material necessary for the
claimant to perfect his or her claim, an explanation of why such material
is necessary and an explanation of the Plan's review procedure. Such
written notice shall be given to the claimant within ninety (90) days after
Tandem receives his or her claim, unless special circumstances require
additional time for processing. If additional time for Processing is
required, written notice shall be furnished to the claimant prior to the
termination of the initial ninety (90) day period. Such notice shall
indicate the special circumstances requiring the extension of time and the
date by which Tandem expects to render its decision on the claim for
benefits or applications for a loan or withdrawal. If a claimant has not
received written notice that additional time is required for processing his
or her claim or application within ninety (90) days of the date it is
received by Tandem, the claim or application shall be deemed to have been
denied and the claimant shall be permitted to appeal such denial in
accordance with the review procedure described in Sections 9.11 through
9.15. If a claimant receives proper and timely notice that additional time
is required for processing his or her claim or application, but does not
receive written notice of Tandem's decision with respect to the claim or
application within one hundred eighty (180) days after the date the claim
or application is received by Tandem, the claim or application shall be
deemed to have been denied and the claimant shall be permitted to appeal
such denial in accordance with the review procedure described in Sections
9.11 through 9.15.
9.11 Appointment of Review Panel. Tandem shall
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appoint a "Review Panel" which shall consist of three (3) or more
individuals who may (but need not) be Employees of the company. The Review
Panel shall be the named Fiduciary which shall have authority to act with
respect to appeals from denials of claims for benefits or applications for
loans or withdrawals under the Plan.
9.12 Right to Appeal. Any person whose claim for benefits or
application for a loan or withdrawal is denied (or deemed denied), in whole
or in part, or such person's authorized representative, may appeal from the
denial by submitting a written request for review of the claim to the
Review Panel within sixty (60) days after receiving written notice of the
denial from Tandem (or, in the case of a deemed denial, within sixty (60)
days after the date the claim or application is deemed denied) . Tandem
shall give the claimant (or the claimant's representative) an opportunity
to review pertinent documents in preparing a request for review.
9.13 Form of Request for Review. A request for review must be made in
writing and shall be addressed as follows: "Review Panel, Tandem Computers
Incorporated 401 (k) Investment Plan, Tandem Computers Incorporated, 19133
Valco Parkway, Cupertino, CA 95014-2599." A request for review shall set
forth all of the grounds upon which it is based, all facts in support
thereof and any other matters which the claimant deems pertinent. The
Review Panel may require the claimant to submit such additional facts,
documents or other material as it may deem necessary or appropriate in
making its review.
9.14 Time for Review Panel Action. The Review Panel shall act upon
each request for review within sixty (60) days after receipt thereof,
unless special circumstances require additional time for review. If
additional time for review is required, written notice shall be furnished
to the claimant
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prior to the end of the initial sixty (60) day period, indicating the date
by which the Review Panel expects to render its decision on his or her
request for review. In no event shall the decision of the Review Panel be
rendered more than one hundred twenty (120) days after it receives a
claimant's request for review.
9.15 Review Panel Decision. Within the time prescribed by Section
9.14, the Review Panel shall give written notice of its decision to the
claimant and Tandem. In the event the Review Panel confirms the denial of
the claim for benefits or the application for a loan or withdrawal, in
whole or in part, such notice shall set forth, in a manner calculated to be
understood by the claimant, specific reasons for such denial and specific
references to the Plan provisions on which the decision was based. In the
event that the Review Panel determines that the claim for benefits or the
application for a loan or withdrawal should not have been denied, in whole
or in part, Tandem shall take appropriate remedial action as soon as
reasonably practicable after receiving notice of the Review Panel's
decision. If a claimant has not received written notice that additional
time is required for review within sixty (60) days of the date his or her
request for review is received by the Review Panel, the claim or
application shall be deemed to have been denied on review. If a claimant
receives proper and timely notice that additional time is required for
review, but does not receive written notice of the Review Panel's decisions
with respect to this claim within one hundred twenty (120) days after the
date the Review Panel receives the request for review, the claim or
application shall be deemed to have been denied on review.
9.16 Rules and Procedures. The Review Panel shall
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establish such rules and procedures, consistent with the Plan and with
ERISA, as it may deem necessary or appropriate in carrying out its
responsibilities under Sections 9.12 through 9.15. The Review Panel may
require a claimant who wishes to submit additional information in
connection with an appeal from the denial of benefits to do so at his or
her own expense.
9.17 Exhaustion of Remedies. No legal or equitable action for benefits
under the Plan shall be brought unless and until the claimant: (i) has
submitted a written claim for benefits or application for a loan or
withdrawal in accordance with Section 9.9, (ii) has been notified that the
claim or application is deemed denied as provided in Section 9.10), (iii)
has filed a written request for a review of the claim or application in
accordance with Section 9.12 and (iv) has been notified in writing that the
Review Panel has affirmed the denial of the claim or application (or the
claim or application is deemed to have been denied on review as provided in
Section 9.15).
ARTICLE X MANAGEMENT OF FUNDS.
10.1 Trust Agreement. All the funds of the Plan shall be held by a
Trustee appointed from time to time by Tandem under a trust agreement
adopted, or as amended, by Tandem as provided in Section 9.2 for use in
providing the benefits of the Plan and paying its expenses not paid
directly by the Company. The Trustee shall have all rights, powers and
duties which are not inconsistent with the trust agreement. The Company
shall have no liability for the payment of benefits under the Plan nor for
the administration of the funds paid over to the Trustee.
10.2 Exclusive Benefit Rule. Except as otherwise provided in the Plan,
no part of the corpus or income of the Funds of the Plan shall be used for,
or diverted to, purposes
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other than for the exclusive benefit of members and other persons entitled
to benefits under the Plan. No person shall have any interest in or right
to any part of the earnings of the Funds of the Plan, or any right in, or
to, any part of the assets held under the Plan, except as and to the extent
expressly provided in the Plan.
ARTICLE XI TOP HEAVY PROVISIONS
Any other provision of the Plan notwithstanding, the provisions of
this Section shall become applicable under the circumstances described in
this Section:
11.1 Top Heavy Determination. For purposes of this Article, the Plan
shall be "top-heavy" with respect to any Plan Year if, as of the last day
of the preceding Plan Year, the value of the aggregate of the accounts
under the Plan for "key employees," as defined in section 416(i) of Code,
exceeds 60 percent of the value of the aggregate of the accounts under the
Plan for all employees. The value of such accounts shall be determined in
accordance with section 416(g) of the Code and Article 5 of this Plan. For
purposes of determining whether the Plan is top-heavy, the account balances
under the Plan will be combined with the account balances or accrued
benefits under any other qualified plan of the company or an Affiliated
Company in which there are participants who are key employees.
11.2 Minimum Allocation. For any Plan Year with respect to which the
Plan is top-heavy, in addition to the contributions otherwise provided
under the Plan, the Company shall make contributions out of its Profits on
behalf of any Member who is a non-key employee and who is eligible to make
Deferred Contributions under Section 3.1 of the Plan at any time during the
Plan Year and who has not separated from service with the Company or an
Affiliated Company at the end of the Plan
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Year. Such contributions, when added to the Company contributions allocated
to his or her Company Account under Section 3.2 and 3.7(c), and his or her
Deferred Contributions allocated to his or her Deferred Account under
Section 3.1, will be equal to a percentage of such Member's Section 415
Compensation for such Plan Year, such percentage to be the lesser of 3% or
the percentage rate, determined for the key employee for whom such
percentage is the highest, equivalent to a fraction the numerator of which
is the contribution made on behalf of such key employee by the Company
under Sections 3.2 and 3.7(c), and his or her Deferred Contributions
allocated under Section 3.1, and the denominator of which is the Section
415 Compensation Of such key employee for such Plan Year not in excess of
the amount described in paragraph (b) below. 11.3 Service Defined. For
purposes of this Section, an Employee's "Years of Service" shall equal the
Employee's Period of Service (expressed as calendar months) divided by
twelve. An Employee's "Period of Service" shall be determined under the
following rules:
(a) Period of Employment Relationship. An Employee's Period of
Service shall include any period during which he or she maintains an
employment relationship with the Company or any Affiliated Company for
which he or she receives or is entitled to receive compensation and,
subject to (c) below, ends on the date the Employee quits, dies, is
discharged or retires. An Employee shall not be considered to have quit
under the following circumstances:
(i) When the Employee is laid-off or takes a leave of
absence without pay approved by the Company or any Affiliated Company. In
the case of an approved leave of absence without pay for a period in excess
of 24 months, the Employee shall be deemed to have quit as of the end of
such 24 month
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period if he or she fails to abide by the terms and conditions of such
leave, which may include a requirement of reemployment.
(ii) When the Employee enters military service with the
United States, provided the Employee returns to active employment with the
company or any Affiliated Company within the time the Employee's
reemployment rights are protected under applicable law. If the Employee
does not so return, he or she shall be deemed to have quit on the date of
entry into military service.
(ii) When the Employee is unable to work due to disability
or sickness.
(iii) When the Employee is on jury duty, a leave of absence
with pay, an approved vacation, a holiday, or sabbatical leave.
Notwithstanding the foregoing, if an Employee quits, is discharged, dies or
retires while on leave, vacation, holiday or jury duty, or while laid-off,
disabled or sick, then, subject to (iii) below, his or her employment
relationship with the Company or any Affiliated Company shall terminate on
the earlier of the date of such quit, discharge, death or retirement or 12
months after the commencement of such leave, vacation, holiday, jury duty,
lay-off, disability or sickness. An Employee shall be deemed to have been
discharged as of the earlier of the date he or she receives oral or written
notice of discharge or the date a written notice is deposited in the United
States mail (on a registered or certified basis) to the Employee's last
known address.
(b) Period for Which Back Pay Awarded. An Employee's Period of
Service shall include any period not otherwise counted a part of his or her
Period of Service for which the Employee is awarded, or entitled to, back
pay from the Company or any Affiliated Company (regardless of any
mitigation of damages).
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(c) Period Following Termination. An Employee's Period of Service
shall include any period following the termination of his or her employment
relationship (determined pursuant to (i) above) if the Employee is rehired
by the company or any Affiliated Company within the 12 month period
following such termination.
(d) Other Periods. An Employee's Period of Service includes any
other period which constitutes a "Period of Service" under written rules or
regulations adopted from time to time by Tandem.
(e) Aggregation of Periods of Service. All of an Employee's
Periods of service determined pursuant to this Section shall be aggregated
on the basis of complete calendar months, whether or not such Periods of
Service are consecutive, except that if an Employee's Period of Service
commences on other than the first day of a calendar month and ends on other
than the last day of a calendar month, the days in such months shall be
aggregated and one additional calendar month of service shall be credited
if the number of such days is at least 30 but less than 60, and two
additional calendar months shall be credited if the number of such days
equals 60.
ARTICLE XII GENERAL PROVISIONS.
12.1 Nonalienation. Except as permitted or required by any applicable
law, no benefit under the Plan shall in any manner be anticipated, assigned
or alienated, and any attempt to do so shall be void.
(a) Qualified Domestic Relations Orders. Notwithstanding the
foregoing, the Trustee is specifically authorized to comply with any
domestic relations order which is determined by Tandem to be a Qualified
Domestic Relations Order.
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For this purpose a "Qualified Domestic Relations order" means any judgment,
decree or order which:
(i) creates for, or assigns to, a spouse, former spouse,
child or other dependent of a Member an "Alternate Payee") the right to
receive all or a portion of the Member's benefits under the Plan for the
purpose of providing child support, alimony payments or marital property
rights to such Alternate Payee.
(ii) is made pursuant to a State domestic relations law,
(iii) does not require the Plan to provide any type of
benefit, or any option, not otherwise provided under the Plan, and
(iv) otherwise meets the requirements of section 206(d) of
ERISA and 414(p) of the Code.
(b) Immediate Payment Permitted. Payment may be made at any time
to an Alternate Payee under a Qualified Domestic Relations Order, in
accordance with that order, beginning as soon as practicable after the Plan
Administrator determines that the order is a Qualified Domestic Relations
Order, notwithstanding the fact that the distribution, if made to a Member
at the time specified in the order, would not be permitted under the terms
of the Plan.
12.2 Conditions of Employment Not Affected by Plan. The establishment
of the Plan shall not confer any legal rights upon any Employee or other
person for a continuation of employment, nor shall it interfere with the
rights of the Company to discharge any Employee and to treat him or her
without regard to the effect which that treatment might have upon him or
her as a Member of the Plan.
12.3 Facility of Payment. If Tandem shall find
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that a Member or other person entitled to a benefit is unable to care for
his or her affairs because of illness or accident or is a minor, Tandem may
direct that any benefit due him or her, unless claim shall have been made
for the benefit by a duly appointed legal representative, be paid to his or
her spouse, a child, a parent or other blood relative, or to a person with
whom he or she resides. Any payment so made shall be a complete discharge
of the liabilities of the Plan for that benefit.
12.4 Lost Member or Beneficiary. If Tandem is unable to locate a
Member who is entitled to receive a benefit upon attainment of age 59-1/2
or a Beneficiary who is entitled to receive a benefit under the Plan, then
Tandem may (but need not) reallocate such property among other Members as
part of a subsequent Company contribution on the fifth (5th) anniversary.
In the event that such Member or Beneficiary thereafter makes a claim for
such benefit, the Company shall reinstate such benefit (without income,
gains or other adjustment) by making a special contribution as soon as
reasonably practicable after such claim is made. However, if any benefit
under the Plan would have been lost by reason of escheat under applicable
state law, then such property shall not be subject to reinstatement by the
Company.
12.5 Construction. The Plan shall be construed, regulated and
administered in accordance with ERISA, and the laws of the State of
California, except where ERISA controls.
ARTICLE XIII AMENDMENT, MERGER, AND TERMINATION.
13.1 Amendment of Plan. The Board of Directors of Tandem, or its
delegates, if Tandem has delegated its authority pursuant to Section 9.5,
reserves the right at any time and from time to time, and retroactively if
deemed necessary or appropriate, to amend in whole or in part any or all of
the provisions of the Plan. In addition, the Plan Administrator may
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amend in whole or in part any or all of the provisions of the Plan to the
extent that the amendment is intended to either clarify the Plan or to
bring the Plan into compliance with applicable Federal or state law, but
only if such amendment would not have a significant financial impact on the
Plan or the company. However, no amendment shall make 'it possible for any
part of the assets of the Plan to be used for, or diverted to, purposes
other than for the exclusive benefit of persons entitled to benefits under
the Plan. No amendment to the Plan shall be effective to the extent that it
would have the effect of decreasing any Member's Accounts or would
otherwise violate section 411(d) (6) of the Code. Unless Tandem expressly
provides to the contrary in its action taken to amend the Plan, no
amendment shall affect the rights of any Member whose employment with the
Company terminated prior to the date on which the amendment was adopted.
13.2 Merger or Consolidation. The Plan may not be merged or
consolidated with, and its assets or liabilities may not be transferred to,
any other plan unless each person entitled to benefits under the Plan
would, if the resulting plan were then terminated, receive a benefit
immediately after the merger, consolidation, or transfer which is equal to
or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation, or transfer if the Plan had
then terminated.
13.3 Additional Participating Companies. If any company is or becomes
a subsidiary of or associated with the Company, Tandem may include the
employees of that subsidiary or associated company in the membership of the
Plan upon appropriate action by that company necessary to adopt the Plan.
13.4 Termination of Plan. Tandem may terminate the
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Plan or completely discontinue contributions under the Plan for any reason
at any time. In case of termination or partial termination of the Plan, or
complete discontinuance of Company contributions to the Plan, the rights of
affected Members to their Accounts under the Plan as of the date of the
termination or discontinuance shall be nonforfeitable. The total amount in
each member's Accounts shall be distributed, as Tandem shall direct, to the
Member or for the Member's benefit or continued in trust for his or her
benefit until distributed in accordance with the terms of the Plan.
IN WITNESS WHEREOF, Tandem has caused this Plan document to be
executed by the undersigned as of the 9th day of April 1993.
TANDEM COMPUTERS INCORPORATED
By: /s/
---------------------------
Vice-President and
General Counsel
By: /s/
---------------------------
Senior Vice President and
Chief Financial Officer
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APPENDIX A
MERGER OF INTEGRATED TECHNOLOGY, INC.
EMPLOYEE SAVINGS & INVESTMENT PLAN
INTO THIS PLAN
A.1 Merger of ITI Plan. Effective as of the date designated by Tandem
(the "Mercier Date"), the Integrated Technology, Inc. Employee Savings &
Investment Plan (the "ITI Plan") is merged into and shall be part of this
Plan and shall be governed by this document and the Trust Agreement. As of
the Merger Date, all assets of the ITI Plan shall become assets of this
Plan and may be used to pay all benefits provided under this Plan.
A.2 Continuation of Participation. All individuals who are
Participants, pursuant to Section 2.3 of the ITI Plan, in the ITI Plan as
of January 1, 1989 ("ITI Transferees") shall become Members in this Plan as
of January 1, 1989. All other employees of Integrated Technology, Inc.
("ITI") shall be eligible to participate in this Plan as provided in
Article 2. Each ITI Transferee may make an election before January 1, 1989
to have his or her Compensation paid with respect to payroll periods
beginning on or after January 1, 1989 reduced, in accordance with Section
3.1, and contributed to the Plan as Deferred Contributions. "Salary
Deferral Elections" made pursuant to Section 3.1 of the ITI Plan shall not
apply to Compensation paid with respect to payroll periods beginning on or
after January 1, 1989.
A.3 ITI Accounts
(a) The amount credited, as of the Merger Date,
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to the "Account" (as defined in Section 1.1 of the ITI Plan) of each ITI
Transferee under the ITI Plan shall be credited to a special account(the
"ITI Account") for the ITI Transferee under this Plan. The ITI Account
shall be an Account, within the meaning of Section 1.1, of the ITI
Transferee. All amounts credited to an ITI Transferee's ITI Account shall
be 100% vested.
(b) Each ITI Transferee shall make an election in accordance with
Section 4.2 (relating to investment elections), effective as of the Merger
Date, to have his or her ITI Account and amounts credited to his or her
other Accounts invested in one or more of the Funds. Thereafter, this
investment election may be changed as provided in Section 4.4 (relating to
changes in investment elections).
A.4 Distributions, Withdrawals And Loans From ITI Accounts
(a) General Rule. Except as otherwise provided in this Section
A.4 of Appendix A, all distributions, withdrawals and loans made an or
after the Merger Date from an ITI Transferee's Accounts shall be made in
accordance with the other provisions of the Plan.
(b) Death Distributions. If an ITI Transferee dies before the
first date for which distribution of his or her ITI Account would have
commenced, the entire balance of his or her ITI Account, as determined on
the Valuation Date immediately preceding the date of the Participant's
death, shall be distributed as follows:
(1) Except to the extent provided in paragraph (2) below of
this Section A.4(b), the balance of the ITI Transferee's ITI Account shall
be paid to the Beneficiary or Beneficiaries designated by the ITI
Transferee. Payment of the ITI Account shall begin as soon as practicable
after Tandem receives proof of death and evidence of right to payment.
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(2) If an ITI Transferee is married at the time of his or
her death, the Member's spouse shall receive a Qualified Preretirement
Survivor Annuity unless the ITI Transferee has effectively waived the
Qualified Preretirement Survivor Annuity in accordance with paragraph (4)
below of this Section A.4(b). A "Qualified Preretirement Survivor Annuity"
is an annuity making monthly payments for the life of the ITI Transferee's
spouse with payments in an amount which can be provided by an annuity
contract purchased with the ITI Transferee's ITI Account. Payment of the
Qualified Preretirement Survivor Annuity shall begin as soon as practicable
after Tandem receives proof of death.
(3) Tandem shall provide each ITI Transferee, who has not
already received such an explanation, with a written explanation of the
Qualified Preretirement Survivor Annuity, including a general description
of the optional forms of distribution under the Plan and sufficient
additional information to explain the relative values of optional forms of
benefit available under the Plan. The explanation shall be provided within
whichever of the following periods ends last:
(i) The period beginning with the first day of the
first Plan Year in which the ITI Transferee attains age 32 and ending with
the last day of the Plan Year preceding the Plan Year in which the ITI
Transferee attains age 35;
(ii) In the case of an ITI Transferee who becomes a
Member after the first day of the first Plan Year in which the ITI
Transferee attains age 32, the period beginning one year before and ending
12 months after the date the ITI Transferee becomes a Member (or, if
earlier, the date he or she became a "Participant" in the ITI Plan); or
(iii) In the case of an ITI Transferee who separates
from service before attaining age 35, the period
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beginning one year before and ending one year after the ITI Transferee
separates from service.
(4) The ITI Transferee may waive the Qualified Preretirement
Survivor Annuity in writing. The ITI Transferee's waiver shall not be
effective unless his or her spouse consents in writing to the waiver and
the spouse's signature is witnessed by a notary public or the Plan
representative designated by Tandem. The ITI Transferee may waive the
Qualified Preretirement Survivor Annuity at the following times after
receiving the written explanation described in paragraph (3) above of this
Section A.4(b)
(i) on or after the first day of the Plan Year in which
he or she attains age 35; or
(ii) Before the first day of the Plan Year in which he
or she attains age 35 provided, however, that such waiver shall become
ineffective on the first day of the Plan Year in which the ITI Transferee
attains age 35. If the ITI Transferee waiving the Qualified Preretirement
Survivor Annuity designates someone other than his or her spouse as a
primary Beneficiary, the ITI Transferee's waiver must specify the nonspouse
primary Beneficiaries and the spouse's consent must acknowledge this
designation. The ITI Transferee may not change the designated nonspouse
Beneficiary without his or her spouse's further written consent.
5. If the ITI Transferee is not married at death or if he or
she has waived the Qualified Preretirement Survivor Annuity, with his or
her spouse's written consent, in accordance with paragraph (4) of this
Section A.4(b), then payment of his or her ITI Account shall be made to his
or her Beneficiary or Beneficiaries in the form of a lump sum payment not
later than five years after the death of the ITI Participant. The
Beneficiary may elect in writing to receive
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payment in the form of a 5-Year Certain Annuity, as defined in section
A.4(c)(2)(iii) below, commencing within one year of the ITI Transferee's
death. If the Beneficiary receiving the lump sum payment or 5-Year Certain
Annuity is the spouse of the ITI Transferee, the spouse may elect to delay
the commencement of such distribution until a date not later than the date
on which the ITI Transferee would have attained age 70-1/2.
(c) Distributions to ITI Transferees. Subject to Section 8.2,
following termination of employment, distributions of an ITI Transferee's
ITI Account shall be made to the ITI Transferee as follows. The monthly
amount of the distributions to the ITI Transferee and his or her
Beneficiary shall be that amount provided under an annuity contract
purchased with the entire balance of the ITI Transferee's ITI Account.
(1) Normal Forms. Unless the III Transferee elects otherwise
in accordance with Section A.4(c)(3) below, his or her ITI Account shall be
paid:
(i) If the ITI Transferee is not married, as a Life
Annuity; or
(ii) If the ITI Transferee is married, as a Qualified
Joint and Survivor Annuity. A "Qualified Joint and Survivor Annuity" is a
50% Contingent Annuity (as described in Section A.4(c)(2)(v)below) with the
ITI Transferee's spouse as the contingent annuitant.
(2) Optional Forms. If the ITI Transferee's spouse consents,
in accordance with paragraph (3) below of this section A.4(c), the ITI
Transferee's ITI Account shall be distributed in whichever of the following
forms is elected by the ITI Transferee.
(i) A "Life Annuity" shall pay a monthly benefit for
the life of the ITI Transferee.
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(ii) A "5-Year or 10-Year Certain Life Annuity" shall
pay a monthly benefit for the life of the ITI Transferee with a guarantee
that either 60 or 120 (as elected by the ITI Transferee) monthly payments
will be made to the ITI Transferee. If the ITI Transferee dies before
receiving all of the 60 or 120 (as appropriate) guaranteed monthly
payments, the balance of the guaranteed payments shall be made to his or
her Beneficiary. If no Beneficiary is then living, a single sum payment
equivalent to the remaining guaranteed payments shall be paid to the ITI
Transferee's executors or administrators. If the Beneficiary dies before
receiving the balance of the guaranteed payments, a single sum payment
equivalent to the remaining guaranteed payments shall be paid to the
Beneficiary's executors or administrators.
(iii) A "Year Certain Annuity" shall pay a specified
number of monthly payments (as elected by the ITI Transferee). If the ITI
Transferee dies before receiving all of the monthly payments, the remainder
of the payments shall be paid to his or her Beneficiary or, if there is no
Beneficiary then living, to the ITI Transferee's executors or
administrators in a single payment equivalent to the remaining monthly
payments. If the Beneficiary of an ITI Transferee dies before receiving all
of the remaining monthly payments, a single payment equivalent to the
remaining payments shall be made to the Beneficiary's executors or
administrators.
(iv) A "Full Cash Refund Life Annuity" shall pay
monthly payments for the ITI Transferee's life. If the ITI Transferee dies
before receiving monthly payments which sum to an amount equal to the net
single premium used to purchase the annuity contract, then the excess of
such premium over the sum of the monthly payments paid to the ITI
Transferee shall be paid in a single payment to his or her Beneficiary.
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(v) A "Contingent Joint and Survivor Annuity" shall pay
monthly payments for the life of the ITI Transferee and monthly payments to
the ITI Transferee's Beneficiary (if the Beneficiary is then living),
commencing on the first day of the month following the month in which the
ITI Transferee dies. If the Beneficiary is the ITI Transferee's spouse, the
monthly payments to the Beneficiary may be equal to 100%, 66-2/3% or 50%,
as elected by the ITI Transferee, of the ITI Transferee's monthly payments.
If the Beneficiary is not the ITI Transferee's spouse, then the ITI
Transferee may only elect that the Beneficiary receive monthly payments
equal to 50% of the amount of the ITI Transferee's monthly payments. If the
Beneficiary dies before monthly payments have started to the ITI
Transferee, the ITI Transferee may elect (with spousal consent, if
necessary, as provided in Section A.4(C)(3)) another form of payment. If
the Beneficiary dies after monthly payments have begun to the ITI
Transferee, payments shall cease upon the death of the ITI Transferee.
(vi) A "Lump Sum" shall pay in one payment the entire
balance of the ITI Transferee's ITI Account.
(3) Election of Optional Forms of Payment. If an ITI
Transferee wishes to elect one of the optional forms of payment provided
under Section A.4(c)(2) above in lieu of the normal form of payment
provided under Section A.4(c)(1) above, Tandem shall provide him or her,
within a reasonable time before the first day for which payments will be
made, and his or her spouse (if any) with a written explanation of the
terms and conditions of the normal form of payment, the ITI Transferee's
right to waive and the effect of such waiver of the normal form of payment,
the right of the spouse (if any) of the ITI Transferee to refuse to consent
to the waiver and the right of the ITI Transferee to revoke the waiver and
the effect of such
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revocation. Within the 90-day period proceeding the first day for which
payments would be made to the ITI Transferee, the ITI Transferee may waive
in writing the normal form of payment. If the ITI Transferee is married at
the time payments under an optional form of payment would begin, the ITI
Transferee's waiver shall not be effective unless the ITI Transferee's
spouse consents in writing to the waiver of the normal form of payment. An
ITI Transferee's designation of someone other than his or her spouse as his
or her Beneficiary shall not be effective unless the ITI Transferee's
spouse has consented in writing to the designation of that Beneficiary.
(4) Timing of Distributions.
(i) Subject to Section 8.2, distribution of an ITI
Transferee's ITI Account shall commence on or after the later of the date
the ITI Transferee attains age 65 or terminates employment. The ITI
Transferee may elect to delay commencement of the distribution until after
this date but distribution of his or her ITI Account shall commence not
later than April 1 of the calendar year following the date the ITI
Transferee attains age 70-1/2.
(ii) If an ITI Transferee dies after distribution of
his or her ITI Account has begun, the remaining payments (if any) due to
his or her Beneficiary shall be paid at least as rapidly as under the
method of distribution begun prior to the ITI Transferee's death.
(d) Withdrawals. An ITI Transferee may not make a withdrawal
under Article 6 from his or her ITI Account unless his or her spouse
consents in writing, as provided under Section A.4(c)(3), to the withdrawal
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TANDEM COMPUTERS, INCORPORATED 401(K) INVESTMENT PLAN
AMENDMENT
Effective as of January 1, 1993, the Tandem Computers, Inc. 401(k)
investment Plan shall be amended as follows:
1. Section 1.10(b) shall read as follows:
(b) The annual Compensation of each Employee taken into account
for determining all benefits provided under the Plan for any Plan Year
shall not exceed the amount prescribed under section 401(a)(17) of the
Code, as adjusted from time to time.
(i) If Compensation is to be determined on a period of
time that contains fewer than 12 calendar months, the annual Compensation
limit is an amount equal to the annual Compensation limit for the calendar
year in which the Compensation period begins, multiplied by the ratio
obtained by dividing the number of full months in the period by 12.
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(ii) In determining the Compensation of a Member for
purposes of the limitation under Code section 401(a)(17), the rules of
section 414(q)(6) of the Code shall apply, except in applying such rules,
the term "family' shall include only the spouse of the Member and any
lineal descendants of the Member who have not attained age 19 before the
close of the Plan Year.
(iii) If, as a result of the application of such rules
the adjusted Code section 401(a)(17) limitation is exceeded, then the
limitation shall be prorated among the affected individuals in proportion
to each such individual's Compensation as determined under this section
prior to the application of this limitation.
(iv) If Compensation for any prior Plan Year is taken
into account in determining a Member's allocations or benefits for the
current Plan Year, the Compensation for such prior Plan Year is subject to
the applicable annual Compensation limit in effect for that prior Plan
Year.
2. Section 1.26(f) shall read as follows:
(f) For the purpose of defining a Highly Compensated Employee,
the determination year shall be the Plan Year and the look-back year shall
be the calendar year.
3. Section 8.2 shall read as follows:
8.2 Method of Distribution. The balance to the credit of a Member's
Accounts shall be made in one single sum as soon as practicable after the
date of termination of employment, and except as provided in this Section
8.2 and subject to the provisions of Section 8.3, not later than the 60th
day after the close of the Plan Year in which the Member's termination of
employment occurs. No payment will be made following termination of
employment unless the Member (or if applicable, the Member's Beneficiary)
consents in writing. If a Member (or if applicable, his or her Beneficiary
fails to consent in writing, the Member's distribution will be deferred
until the date which is the Member's Normal Retirement Date under the Plan,
or such earlier date of distribution to which the Member (or if applicable,
his or her Beneficiary) consents. Distributions may be in the form of a
single sum payment or in installments over a fixed period of years as
elected by the Member (or if applicable, his or her Beneficiary). Such
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fixed period of years shall not exceed the maximum period permitted by
section 401(a)(9) of the Code and shall be determined in a manner that
satisfies Treasury Regulation 1.40(a)(9)-2, Q&A 4(a). Distribution of a
Member's Accounts shall begin not later than April 1 of the calendar year
following the calendar year in which he or she attains age 70-1/2.
If a Member dies after distribution of his or her Accounts is
considered to have commenced in accordance with Code section 401(a)(9) and
the regulations thereunder, upon the death of the Member his or her
remaining Accounts will be distributed at least as rapidly as under the
method of distribution being used as of the date of the Member's death. If
a Member dies before distribution of his or her Accounts is considered to
have commenced in accordance with Code section 401(a)(9) and the
regulations thereunder, upon the death of the Member his or her remaining
Accounts will be distributed within 5 years after the Member's death;
provided, however, that distribution to a designated Beneficiary may be
made over a period certain not exceeding the life expectancy of the
Beneficiary, commencing not later than the end of the calendar year
following the calendar year in which the Member died (or, if the
Beneficiary is the surviving spouse of the Member, commencing not later
than the end of the calendar year following the calendar year in which the
Member would have attained age 70-1/2).
Any additional Company contributions allocated to the Member for the
Plan Year in which the Member terminates his or her employment for any
reason and for which a distribution is requested, or the preceding Year
Plan, if applicable, shall be paid to the Member (or if applicable, his or
her Beneficiary) as soon as practicable after the contributions have been
made, subject to the provisions of Section 8.3, if applicable.
4. Appendix B shall be amended to read as attached hereto.
TANDEM COMPUTERS INCORPORATED
By: /s/
--------------------------
Its: Senior Vice President
and Chief Financial Officer
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APPENDIX B
MERGER OF TANDEM COMPUTERS INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
INTO THIS PLAN
B.1 INTRODUCTION.
As of September 30, 1993, the active operation of the Tandem Computers
Incorporated Employee Stock Ownership Plan (the "ESOP") was terminated and all
members of the ESOP were fully vested in their ESOP accounts. No contributions
were made to the ESOP after June 30, 1993. As of the date a final accounting of
members, accounts under the ESOP is completed: (i) the shares of Tandem Stock
in the ESOP suspense account will be exchanged at fair market value for the
debt owed to Tandem by the ESOP trust, (ii) the remaining debt owed to Tandem
by the ESOP trust will be canceled, (iii) the ESOP will be converted from a
stock bonus plan into a profit sharing plan and (iv) the ESOP will be merged
into this Plan.
This Appendix B is intended to protect the accrued benefits of the
ESOP members following the merger of the ESOP into the Plan, in accordance with
Section 411(d)(6) of the Code, and to set forth any special requirements
arising out of the merger. This Appendix B is part of the Plan and shall be
administered in accordance with the provisions thereof, except as expressly
provided herein. Capitalized terms used in this Appendix B shall have the same
meanings given to such terms in the Plan or under Section B.7 below.
B.2 PARTICIPATION.
Each individual who was a member of the ESOP on the merger date set
forth above shall be an Appendix B Participant on such date. In addition, a
former ESOP member shall become an Appendix B Participant when any amounts are
credited to his or her ESOP Transfer Account pursuant to Section B.4 below.
An individual's participation in this Appendix B shall terminate when
he or she no longer has any amount credited to an ESOP Transfer Account.
B.3 ACCOUNTS.
An "ESOP Transfer Account" shall be established for
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each Appendix B Participant to hold any amounts that were in his or her account
under the ESOP and that were transferred to this Plan and any amounts that are
credited to such account pursuant to Section B.4 below, plus earnings thereon.
B.4 REEMPLOYMENT OF FORMER ESOP MEMBERS.
If (i) an ESOP member's employment with an Affiliated Company
terminated when the ESOP member was less than 100% vested in his or her ESOP
account, (ii) the ESOP member is reemployed by an Affiliated Company after he
or she received a distribution (or a deemed distribution) of his or her vested
ESOP account but prior to incurring Permanent Service Break, and (iii) the
former ESOP member pays to the Plan the amount of his or her previous
distribution from the ESOP before incurring a Permanent Service Break and
within five years following reemployment, then an ESOP Transfer Account shall
be established for such former ESOP member. The ESOP Transfer Account shall be
credited with the amounts paid to the Plan by the former ESOP member pursuant
to this Section B.4 and, by payment of an additional contribution by the
Company, with the amount that was forfeited from the ESOP account of the former
ESOP member upon the previous distribution. An Appendix B Participant shall be
fully vested in any amounts credited to his or her ESOP Transfer Account
pursuant to this Section B.4.
B.5 WITHDRAWALS, DISTRIBUTIONS AND LOANS FROM ESOP TRANSFER ACCOUNT.
For purposes of Article VI of the Plan (withdrawals while still
employed), Article VII (Loans to Members) and Article VIII (Distribution of
Accounts), an Appendix B Participant's ESOP Transfer Account shall be treated
as a part of a Member's Accounts; provided however, that distributions from a
Member's ESOP Transfer Account shall be made in a single distribution
consisting of whole shares of Tandem Stock with the value of any fractional
share paid in cash.
B.6 INVESTMENTS.
A Participant's ESOP Transfer Account shall be invested primarily in
shares of Tandem Stock. In accordance with procedures established by Tandem, an
Appendix B Participant may be entitled to direct the investment of his or her
ESOP Transfer Account among such investments as may be made available under the
Plan. In accordance with procedures established by Tandem, an Appendix B
Participant's election to direct the
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investment of his or her ESOP Transfer Account may be treated as an irrevocable
election by the Participant to transfer those amounts credited to the ESOP
Transfer Account over which an investment direction is made to the Company
Account under the Plan.
B.7 DEFINITIONS.
The following definitions shall apply for purposes of this Appendix B.
"Appendix B Participant" means an individual who participates in this
Appendix B pursuant to Section B.2 above.
"ESOP Transfer Account" means the account established under Section
B.3 above.
"One Year Break in Service" means a 12 consecutive month break in a
Period of Service, as such term is defined in Section 11.3 of the Plan.
"Permanent Service Break" means five consecutive one Year Breaks in
Service.
"Tandem Stock" means the shares of common stock issued by Tandem.
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Exhibit 5.1
December 31, 1997
Compaq Computer Corporation
20555 S.H. 249
Houston, Texas 77070
Ladies and Gentlemen:
I am the Vice President and Associate General Counsel of
Compaq Computer Corporation ("Compaq") and have acted in such capacity
in connection with Compaq's Registration Statement on Form S-8 to
register under the Securities Act of 1933, as amended, the offer and
sale of shares of Compaq's Common Stock ("Shares") pursuant to the
Tandem Computers Incorporated 401(k) Investment Plan. In connection
therewith, I (or attorneys under my supervision) have examined
originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as I have deemed necessary for
the purpose of this opinion.
Upon the basis of the foregoing, I am of the opinion that the
Shares have been duly authorized and, when and to the extent issued for
adequate consideration therefor in accordance with the Plan, will be
validly issued, fully paid and nonassessable.
I consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ Linda S. Auwers
Linda S. Auwers
Vice President and
Associate General Counsel
<PAGE> 1
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) of Compaq Computer Corporation pertaining to Tandem Computers Incorporated
401(k) Investment Plan of our report dated May 8, 1997, with respect to the
financial statements and schedules of Tandem Computers Incorporated 401(k)
Investment Plan included in the Annual Report (Form 11-K) for the year ended
December 31, 1996.
/s/ Ernst & Young LLP
Ernst & Young LLP
San Jose, California
December 24, 1997
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of Compaq Computer Corporation of our report dated January
21, 1997, except as to Note 12, which is as of November 21, 1997, which appears
in the Current Report on Form 8-K dated November 21, 1997.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Houston, Texas
December 31, 1997
